Page 11 - New England Condominium March 2020

constitute a majority,” thus technically being interest disclosures, but neither fully precludes created conflict during her directorship. She plaintiff is a board member presents a really able to make decisions overriding the other a potentially conflicted member from running considered many of her fellow board mem- members. There’s also a smaller pool from for or serving on the board. Therefore, if a real bers—who had also been her neighbors for or board members we spoke with for this ar- which to pull candidates, “so ... if they have to estate professional such as a broker is elected upwards of 15 years—good friends. When ticle have personal experience with such a co- resort to a husband and wife in order to fill to serve on a board in those states, Cholst ad- board seats, that too is a real problem.” Cholst vises, “At an absolute minimum, the broker up for sale, an ethical dilemma ensued. Cer- therefore advises smaller buildings to proac- tively involve every shareholder/owner so that sions, all discussions on the board package, all for sale would recuse herself from that trans- everyone is motivated to run for the board. He discussions on admission policy”—a practice action’s discussion and vote—not because she board may face. At the very minimum, he then goes a step further, characterising board that Cholst says is hard to administer. Even if stood to gain from it financially, but because recommends that “co-ops should amend their service as “imperative” for every shareholder/ owner in a smaller building. In fact, he’s “had recusal is not a good look for a board and can ers would assume she would try to influence shareholders (or representatives of sharehold- small buildings where at least one member stymie its deliberations and decision making. of the household is mandated to serve on the board.” Is There a Broker in the House? In addition to familial relationships, pro- fessional relationships also can be problem- atic for boards. Any time a board member neighbors first—with each other, and with recommended in such a circumstance, there owner or shareholder be in good standing to stands to gain personally or financially from a their electorates—and being neighbors can would not be enough approvals for the sale to run for the board. That means that a person transaction or relationship in which the board lead to its own set of challenges. engages, there’s a strong chance of conflicting interests. According to Axinn, “If a member op among people who live in close proximity same result. No matter how they voted, they board, which would lead to many problems of the board is a lawyer or real estate broker and share common spaces. This is arguably all risked being seen as conspiring with their down the road when the board meets to dis- with a transaction at the building, many issues one of the more appealing aspects of multi- arise—including whether the professional family living. But familiarity has its pros and their fiduciary duty. has access to information or influence...that cons. For one thing, depending on the size of someone else who is not on the board does the board, a couple or small group of friends could really throw a wrench into a board’s du- not have.” He speaks from his own profes- sional experience. “I have a co-op right now or at the very least, be seen as such. And in an financial decisions they make, boards are also to them, or involved in a business that may that is dealing with a broker on the board,” elected fiduciary role, appearances can be as tasked with resolving resident issues. What benefit from contracting with the association. says Axinn, “and it can lead to several poten- tial conflicts.” New York and Florida have recently added recounts a time when the intertwinings of owner is also a fellow board member? Man- provisions in their state statutes for conflict of friendship, neighbor-ness, and board service aging a lawsuit against the co-op where the has to be shut off from all admissions deci- it were seamless, a board member’s perpetual of the possibility that her fellow sharehold- Love Thy Neighbor Even where no familial or professional af- filiations exist, there are certainly opportuni- ties for close relationships on a board to foster rector already recused, if they all—or even (i.e., not in arrears or default) in order to vote, conflicts. After all, most board members are some—abstained from voting, as might be but there is no similar requirement that a unit Naturally, friendships and alliances devel- can amount to a voting block or a majority— powerful as reality. A co-op board member in Manhattan a fellow unit owner? What if that fellow unit night, try not to discuss board business. the apartment adjacent to one of them came nundrum. tainly the board member adjacent to the unit sions of many of which attorney Axinn says the board to reject the sale so that she could ers in the case of sponsor designees) to ensure buy the unit herself and connect it with her that the board members have some ownership own. The other board members who were interest in the building. … Also, many condos friends were conflicted as well. With one di- pass. Even if they had good reason to reject can be in default or in a litigation with the the sale, any opposing votes would have the apartment corporation and still run for the friend—even if they acted in accordance with cuss litigation strategies.” Indeed, there are plenty of scenarios that keep your friends close … but if you serve on ties. In addition to the operational, policy, and you are married, related, financially beholden happens when one of them has an issue with And while you’re out for drinks on a Friday tough situation. Luckily, none of the attorneys It all comes down to the bylaws, the provi- come up short in addressing the conflicts a bylaws to require that board members be require a unit owner to be in good standing So go ahead and love thy neighbor, and a board with them, tread carefully, especially if n Darcey Gerstein is Associate Editor and a Staff Writer for New England Condominium. NEWENGLANDCONDO.COM NEW ENGLAND CONDOMINIUM -MARCH 2020 11 ■ Depth of Knowledge & Experience ■ Expert Advice ■ Creative Approaches & Solutions ■ Flexible Billing Arrangements Thomas Bhisitkul (781) 817-4611 tbhisitkul@lawmtm.com Christopher S. Malloy (781) 817-4604 cmalloy@lawmtm.com Douglas A. Troyer (781) 817-4605 dtroyer@lawmtm.com Thomas O. Moriarty (781) 817-4603 tmoriarty@lawmtm.com (781) 817-4900 30 B RAINTREE H ILL O FFICE P ARK , S UITE 205 B RAINTREE , MA 02184 (617) 934-4550 265 F RANKLIN S TREET , S UITE 1801 B OSTON , MA 02110 www.lawmtm.com MTM is a full-service Condominium & Real Estate Law Firm Experience, Integrity, & Drive Set Us Apart Uncommon Expertise for your Community of Common Interests